Which parent-teacher organization fundraising sales are exempt in Kansas, and which — like carnival games and bingo — are taxable?

Plain-English summary

A parent-teacher organization (PTO) asked how Kansas sales tax applies to the items and activities at its fundraiser.

The PTO exemption covers property, not services. The Department quoted K.S.A. 79-3606(yy), which exempts "all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization."

What is exempt. "[T]he tickets that can be exchanged for food and drink by a parent-teacher association or organization would be exempt from sales tax," and "the proceeds from the silent auction, if held by or on behalf of a parent-teacher association or organization, would likewise be exempt." These are sales of tangible personal property.

What is taxable. "Sales of tickets for right to play carnival games, as well as the sale of bingo cards, by or on behalf of a parent-teacher association or organization, would be subject to the appropriate Kansas sales tax(es)." The reason: "the statute exempts only the sale of tangible personal property and not the providing of a taxable service." In addition, the PTO "is obligated to remit the Bingo Enforcement tax on the gross receipts received from the sale of the pre-sold bingo cards."

Bottom line: the PTO's sales of tangible personal property (food/drink tickets, silent-auction items) are exempt, but its charges for playing carnival games and its bingo-card sales are taxable services — and it also owes the Bingo Enforcement tax on pre-sold bingo cards.

What this means for you

The exemption is limited to tangible personal property

K.S.A. 79-3606(yy) exempts a PTO's purchases and its sales of tangible personal property. It does not exempt the PTO's sale of taxable services, so activity charges are analyzed separately.

Food/drink tickets and silent auctions are exempt property sales

Tickets redeemable for food and drink, and silent-auction sales, are sales of tangible personal property by or on behalf of the PTO, so they fall within the exemption.

Carnival games and bingo are taxable

Charging for the right to play carnival games is a taxable service, not a sale of property, so it is taxable. Bingo-card sales are taxable as well, and separately trigger the Kansas Bingo Enforcement tax on gross receipts from pre-sold cards.

Track fundraiser revenue by type

Because the answer differs between property sales and service charges, a PTO should separate its receipts so it collects and remits tax only on the taxable game and bingo components while treating qualifying property sales as exempt.

Common questions

Q: Are a PTO's fundraiser sales of food and drink tickets taxable?
A: No. Tickets exchangeable for food and drink are exempt sales of tangible personal property under K.S.A. 79-3606(yy).

Q: Are silent-auction proceeds taxable?
A: No, when the auction is held by or on behalf of the PTO; those are exempt sales of tangible personal property.

Q: Why are carnival-game tickets and bingo cards taxable?
A: Because the PTO exemption covers only sales of tangible personal property, not the providing of a taxable service, and those charges are for services.

Q: Does the PTO owe any other tax on bingo?
A: Yes. It must remit the Bingo Enforcement tax on the gross receipts from the sale of pre-sold bingo cards.

Citations and references

• K.S.A. 79-3606(yy) — exempts sales of tangible personal property and services purchased by a parent-teacher association or organization, and its sales of tangible personal property; it does not exempt the PTO's sales of taxable services.
• Kansas Bingo Enforcement tax — a separate tax the PTO must remit on the gross receipts from pre-sold bingo cards; the ruling referenced it without citing a specific statutory subsection.
• K.A.R. 92-19-59 — the regulation authorizing private letter rulings; this ruling was issued under it and binds the Department only as to the requesting taxpayer.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-210

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 11, 1998

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Dear Ms. TTTTTTT:

We wish to acknowledge receipt of your letter dated December 3, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is a private letter ruling pursuant to K.A.R. 92-19-59.

K.S.A. 79-3606(yy) exempts from sales tax: “all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization.”

Please be advised that the tickets that can be exchanged for food and drink by a parent-teacher association or organization would be exempt from sales tax in the state of Kansas. Additionally, the proceeds from the silent auction, if held by or on behalf of a parent-teacher association or organization, would likewise be exempt from Kansas sales tax(es).

Sales of tickets for right to play carnival games, as well as the sale of bingo cards, by or on behalf of a parent-teacher association or organization, would be subject to the appropriate Kansas sales tax(es). The reason that these transactions would be subject to sales tax in this state, is that the statute exempts only the sale of tangible personal property and not the providing of a taxable service.

It should be noted that the parent-teacher association or organization is obligated to remit the Bingo Enforcement tax on the gross receipts received from the sale of the pre-sold bingo cards.

This response private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 12/14/1998 Date Modified: 10/10/2001

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